ADMINISTRATIVE MANAGEMENT THEORY

ADMINISTRATIVE MANAGEMENT
Administrative Management is a term concerned with designing and managing the whole
structure of organization. It involves monitoring the day to day activities of organization for
ensuring uninterrupted continuity in today’s fast pace environment. Administrative
management is an administrative theory that focuses on creating a formalized administrative
structure, developing a proper hierarchy of authority, deciding their key functions and
responsibilities, and proper division of labour within the organization. It is very key function
for each organization that enables management of information via peoples.

FAYOL’S ADMINISTRATIVE MANAGEMENT THEORY

Henri Fayol was a mining executive and engineer. Later he turned out to be a leading
industrial and successful manager. He wrote a monograph in French titled ‘General and
Industrial Administration’. He is considered as the Father of modern Management theory. He
developed a general theory of business administration that is often called Fayolism. Fayolism
is a theory of management that analysed and synthesized the role of management in
organizations.
Firstly, Fayol is credited with the belief that organisational and business life was an amalgam
of six activities of an industrial undertaking. Secondly, Fayol identified five key functions
comprising managerial activity. Finally, Fayol advocated fourteen principles designed to
guide the successful manager.
The six key activities are:
1. Technical activities like production, manufacture, adaptation.
2. Commercial activities like buying, selling, exchange.
3. Financial activities like optimum use of capital.
4. Security activities like protection of property and persons.
5. Accounting activities like Balance sheet preparation, stock-taking.
6. Managerial activities like planning, organizing, commanding.

Henri Fayol identified 5 functions of management. Henri Fayol theorized that these functions
are universal, and that every manager performs these functions in their daily work. Henry
Fayol’s five functions focus very little on informal relationships between managers and
subordinates, and do not touch very much upon how to develop and maintain a motivated
workforce. The 5 functions presented by Henri Fayol give a structured overview of several
tasks needed to be performed by all managers, which gives managers an initial overview of
which main functions they should be focusing on their daily work.
1. Planning - Managers must plan for future conditions, develop strategic objectives and
secure the achievement of future goals. Therefore, managers must evaluate future
 contingencies affecting the organization, and shape the future operational and
strategic landscape of the company.
2. Organizing - Managers must organize the workforce in an efficient manner and
structure and align the activities of the organization. Managers must also train and
recruit the right people for the job, and always secure a sufficiently skilled and
educated workforce.
3. Commanding - Managers must supervise subordinates in their daily work, and inspire
them to achieve company goals. Likewise, it is the responsibility of managers to
communicate company goals and policies to subordinates. The commanding of
subordinates should always be consistent with company policies, and every manager
should treat subordinates in line with the standards of the company.
4. Coordinating - Managers must harmonize the procedures and activities performed by
the company, meaning that every activity of each organizational unit should
complement and enrich the work of another.
5. Controlling - Managers must control that company activities are in line with general
company policies and objectives. It is also the responsibility of the manager to
observe and report deviations from plans and objectives, and to make initiatives to
correct potential deviations.
Fayol proposed the following 14 principles of management:
1. Division of Labour - Work should be divided among individuals and groups. When
employees are specialized, output can increase because they become increasingly
skilled and efficient. It produces more and better work with the same effort. Fayol
said that work specialization is the best way to use the human resources of the
organisation.
2. Authority and Responsibility - Authority was defined by Fayol as the right to give
orders and the power to exact obedience. Responsibility involves being accountable,
and is therefore naturally associated with authority. Managers must have the authority
to give orders, but they must also keep in mind that with authority comes
responsibility. Responsibility is closely related to authority and it arises wherever
authority is exercised.
3. Unity of command - Each employee should receive instructions about a particular
work from one superior only. If there were more than one superior, the employee
would be confused due to conflict in instructions.
4. Unity of direction - Teams with the same objective should be working under the
direction of one manager, using one plan. Fayol advocates "One head and one plan"
which means that group efforts on a particular plan be led and directed by a single
person. This enables effective co-ordination of individual efforts and energy.
5. Centralization - Fayol defined centralization as lowering the role and importance of
the subordinate role. This principle refers to how close employees are to the decision-
making process. It is important to aim for an appropriate balance.
6. Equity - Management should treat all its employees as equally as possible. Managers
should be free from all prejudices, personal likes or dislikes. It ensures healthy
industrial relations between management and labour. This will create loyalty and
devotion among the employees.
 7. Line of authority – This is the formal line of authority which moves from highest to
lowest rank in a straight line. This chain specifies the route through which the
information is to be communicated to the desired location/person. Fayol emphasized
that every information in the organization must flow according to this chain to
facilitate clear communication of orders of the superiors and feelings of the
subordinates. It consumes a lot of time to pass information.
8. Order - “Right place for everything and right man at right place”. There should be
proper, systematic and orderly arrangement of physical and social factors, such as
land, raw materials, tools and equipment and employees respectively. There should be
an orderliness in work through suitable organization of men and materials.
9. Initiative - Under this principle, the successful management provides an opportunity
to its employees to suggest their new ideas, experiences and more convenient methods
of work. Employees should be given the necessary level of freedom to create and
carry out plans. Employees should be encouraged to make all kinds of suggestions to
conceive and carry out their plans.
10. Discipline - Discipline means obedience to authority, observance of the rules and
norms of performance, respect for agreements, sincere efforts for completing the
given job, respect for the superiors and the organization, etc. The best means of
maintaining discipline are good supervisors at all levels, clear and fair agreements
between the employees and the employer, and judicious application of penalties.
11. Remuneration of personnel - According to Fayol, wage-rates and method of their
payment should be fair, proper and satisfactory. This includes financial and non-
financial compensation. Fair remuneration increases workers’ efficiency and boost
their morale. It also plays a vital role in making the relations of the employees and the
management better.
12. Stability of tenure of personnel - Workers should be assured of the security of job by
the management. This is important to motivate them and extract better work from
them. If they fear for job security, their morale will be low and they cannot give
efficient work. Also, they will not have any sense of attachment to the organization
and they will always be on the lookout for a job elsewhere.
13. Subordination of Individual interest to the common interest - First priority to general
interest. An individual is always interested in maximizing his own satisfaction
through more money, recognition, status, etc. It is very often against the general
interest of the organisation. The interests of one employee should not be allowed to
become more important than those of the group.
14. Esprit de corps - This term means team spirit. Harmony and unity among the
employees are a great source of strength to the organization. To achieve this, the
motto of divide and rule should be avoided. And, verbal communication should be
used for removing misunderstandings.
ADVANTAGES
1. Healthy Financial Situation: Administrative management has an efficient role in
managing financial affairs of business organization. It is a management strategy that
focuses on maintaining all expenses within the decided budget. It supervises all
finances of company and ensures that there is no wastage of money which helps in
maintaining a healthy financial situation.
 2. Higher Productivity: It aims at attaining the better coordination of all resources for
deriving maximum output. The theory of administrative management matches the
members of teams with their task as per their capabilities that leads to faster results
and higher productivity.
3. Facilitates in Acquiring Goals: This efficient strategy of management assist in
accomplishing the primary goals of company. Every policy is framed after a critical
analysis of business projects that leads to better actions and easy achievement of
desired targets.
4. Data-based Decisions: Administrative management theory avoids the basis of any
assumption in decision-making process of organization. All decisions are taken on the
basis of information gathered related to past and present activities of organization and
also the future prospective.
5. Improve Employees and Customer Satisfaction: It helps in enhancing the
satisfaction level of employees by properly allocating them work as per their skills.
Employees gets motivated towards their roles which improve their performance and
overall quality that leads to increase the satisfaction of clients.
DISADVANTAGES
1. Management Oriented- Theory of administrative management is a strategic
management-oriented theory. This theory does not give any attention to the issues of
workers. Ignoring the human behaviour will have adverse effects over the
performance of company.
2. Concepts Borrowed from Military Science- This strategy of management has
borrowed concepts from military science such as commanding. These concepts are
applied to the business and social organizations like Fayol’s paid more focus on
“commanding’’ and not over ‘’directing’’ of workers.
3. Ignores Environmental Changes- Another major limitation of administrative
management strategy is that it does not consider the environment changes which have
major impact over the organization. This theory has a very limited application in
dynamic and complex environment.
4. Mechanical Approach- This theory of management is mechanistic in nature. It
cannot be applied with key aspects of management. Administrative management
theory has a limited utility in a modern management concept such as communication,
leadership and motivation.
5. Deals with Formal Structure- Another major limitation with administrative
management theory is that it completely ignores the informal structure of
organization. It does not give any attention to non-formal groups and organizations.
This management theory only deals with formal structure of an organization.
Neglecting the informal group will have adverse effects on performance of
organization.